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RESEARCH PRODUCT

The price of climate: French consumer preferences reveal spatial and individual inequalities.

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National audience; We use the hedonic price method to study consumer preferences for climate temperature, very hot or cold days, and rainfall) in France, a temperate countrywith varied climates. Data are for (i) individual attributes and prices of houses and workers and (ii) climate attributes interpolated from weather stations. We show that French households value warmer temperatures while very hot days are a nuisance. Such climatic amenities are attributes of consumers’ utility function; nevertheless, global warming assessments by economists, such as the Stern Review Report (2006), ignore these climatic preferences. The social welfare assessment is changed when the direct consumption of climate is taken into account: from the estimated hedonic prices, we calculate that GDP rises by about 1% for a 1°C rise in temperature. Moreover, heterogeneity of housing and households is a source of major differences in the individual effects of climatic warming.